Friday Letter Win win

As global financial markets swirl in tumult, news of an alliance between a global private equity powerhouse and a MENA region specialist provide a sparkling side show in the gloom.  

Your core markets of Europe and the US are in the doldrums, frozen in a credit crunch. What do you do? Look further afield? But as history has shown, many a would-be global business has beaten a retreat, tail between legs, after a hasty and ill-conceived adventure in new markets.

And yet the opportunities in the Middle East look too good to ignore. The Gulf Cooperation Council countries, with an average GDP growth rate of 6.3 percent and a robust population growth rate of 3.5 percent over the past five years, provide an ideal backdrop for investing in the region. 

Credit Suisse, the Swiss bank with $155 billion (€99 billion) in alternative managed assets, cannot resist the glittering prizes any longer. But it has decided to de-risk its approach by partnering.

Prudently, the Swiss bank is tapping local player Gulf Capital's expertise and deal flow.  The two plan to commit a significant but undisclosed amount of investment capital to the alliance.

The deal is potentially a match made in heaven. Gulf Capital offers an on-the-ground presence, access to proprietary deal flow, investment expertise and post-acquisition skills.

Credit Suisse’s strength in managing private equity, its regional and global investment and private banking capabilities offer Gulf Capital access to fresh limited partner funds and leveraged finance expertise it would have struggled to access on its own.

The global bank is putting two of its most senior executives in Chuck Piper and Colin Taylor onto Gulf Capital’s investment committee, while its offices are now open in New York and London to Gulf’s more junior, experience hungry executives.

Gulf Capital can tackle bigger deals while Credit Suisse can enjoy emerging market exposure immediately. Better still Karim El Solh, Gulf Capital’s chief executive, is a former DLJ banker helping to establish chemistry from day one.

How well the Middle East copes with the global economic storm remains to be seen, but a region that is awash with capital needs experienced hands to help take the market to the next level. Credit Suisse and Gulf Capital look a potent combination. It seems certain their liaison will be a blue print for others.